Solar PV to become the cheapest option by 2018

Currently, the world is relying massively on coal to generate electricity as it is cheap, awfully cheap – if you don’t take into account the negative externalities as it is polluting our air, our soil and is one of the main factors to climate change.

But what if solar became even cheaper than coal ? What if if became the cheapest solution ? We would then have a renewable, clean and cheap alternative to produce gigawatts of electricity.

Kees van der Leun – A Dutchman who has been dedicating himself to renewables for the past 25 years – wrote on Grist an excellent post on that very topic.

For a long time, the holy grail of solar photovoltaics (PV) has been “grid parity,” the point at which it would be as cheap to generate one’s own solar electricity as it is to buy electricity from the grid.

And that is indeed an important market milestone, being achieved now in many places around the world. But recently it has become clear that PV is set to go beyond grid parity and become the cheapest way to generate electricity.

Whenever I say this I encounter incredulity, even vehement opposition, from friends and foes of renewable energy alike. Apparently, knowledge of the rapid developments of the last few years has not been widely disseminated.

But it’s happening, right under our noses! It is essential to understand this so that we can leverage it to rapidly switch to a global energy system fully based on renewable energy.

At a very large scale, the cost of manufacturing anything drops to just above the cost of its base materials. As scale goes up, per-unit costs come down.

This is known as a “learning curve” — the price per unit of capacity comes down by x percent for every doubling of cumulatively installed capacity. For solar PV modules, the learning rate has been exceptionally high, averaging 22 percent for the past two decades.

(…) Cumulative installed PV capacity globally was 40 gigawatts (GW) at the end of last year. Three doublings mean this has to grow by a factor of eight, to 320 GW, to achieve the necessary halving of cost.

From 2005 to 2010, PV capacity installed annually grew by an average of 49 percent per year. Even if this slows down to 25 percent per year in the near future, we will reach 320 GW in 2018 — that’s only seven years from now!

To be sure, that was starting from a present PV kWh cost of $0.12, valid for sunny regions like the Southwest U.S. As can be seen from the solar map above, the regions with at least comparable solar radiation include most of Latin America, Africa, the Middle East, Australia, and large swaths of Asia, including all of India. For all those regions, PV will be the cheapest option by 2018.

(…) This development does not, in itself, make life easy. Developing a world energy system that runs on 100 percent renewable energy by 2050 is a major and complex global effort, involving large investments in energy efficiency, renewable energy, and infrastructure, as we have shown in “The Energy Report” [PDF]. But it sure helps a lot!

David Roberts wrote further to this article another one, well worth reading too. This tackles the aftermath of that real paradigm shift in an infrastructural, political and ideological point of view.

Post navigation

Follow me on Twitter

About Edouard

An experienced energy and sustainability professional, Edouard helps organizations and companies save on their utilities and cut their carbon emissions. Fascinated about climate change solutions, he has been writing about related topics since 2004. Learn out more.